Aviva plans to merge its UK and Irish operations, losing up to 950 jobs in the process

The familiar face of a former UK insurer chief executive made a return to the headlines today.

Igal Mayer, head of Aviva UK until late 2009, was at the forefront of the insurer’s  announcement today proposing a restructuring in its Irish business and European operations. Mayer, now chief executive of Aviva Europe, detailed how the insurer is proposing to merge its Irish and UK businesses, which would herald the start of a new UK and Ireland region.

The result of this transformation, however, will be the expected loss of 950 jobs. Of those, 770 jobs are up for the chop in Aviva Ireland, which currently has a total workforce of 1,770 staff. Another 180 roles could be cut from Aviva Europe in Ireland, following a six-month review of its pan-European operations and a proposed restructure of its regional operations in 12 markets.

No pain, no gain

So what is the motive behind the decision to restructure in Ireland? Aviva has been reviewing its Irish operations for some months. The economic situation in the Republic has been challenging to say the least, but the insurer is confident about the potential of the business and is proposing changes that will be more sustainable in the future.

Its biggest challenge is to bring the cost base down and, by combining the Irish arm with the UK’s, it will hope this can be achieved. Last year the UK business reported an expense ratio of 10.5%, compared with 19% in Ireland. Aviva will hope the UK business can set a benchmark for its Irish counterpart.

So what’s next? The proposal needs to go through the relevant bodies, such as trade unions and regulators. Structural changes won’t come into play until next year, but the new UK and Ireland region will fall under the remit of incoming chief executive Trevor Matthews, a spokesman has confirmed.